FCA orders Wonga to pay £2.6m in compensation for sending letters from non-existent law firms
The UK's largest payday loan company Wonga has been ordered to pay 45,000 customers compensation totalling over £2.6 million for unfair and misleading debt collection practices.
Wonga sent communications to customers in arrears under the names “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”. These led customers to believe that their files had been passed to a law firm. Legal action was threatened. However, neither law firm actually existed. The letters were purely a tactic by Wonga to place pressure on debtors.
The practice took place between October 2008 and November 2010 and was also used by other companies in the Wonga Group. The matter was originally investigated by the Office of Fair Trading (OFT) before being passed to the Financial Conduct Authority (FCA).
Chris Adamson, direction of supervision at the FCA, made the following statement:-
“Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears. We are pleased that Wonga has been working with us to put matters right for its customers and to ensure that these historical practices are truly a thing of the past.
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”
A full copy of the FCA's press release can be found here.
Articles are intended as an introduction to the topic and do not constitute legal advice.